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AIC unveils research into the cost of holding investment companies on platforms

9 October 2017

26 direct-to-consumer platforms covered.

The Association of Investment Companies (AIC) has released research to show private investors which are the most cost-effective platforms for holding and transacting investment company shares.

Conducted by the lang cat, a platform consultancy, the research shows the costs of holding portfolios of investment companies between £5,000 and £1 million on 26 different direct-to-consumer platforms. It also throws light on which platforms offer special rates for regular monthly investing or automatic dividend reinvestment.

Platform charges are split into ongoing costs (also known as admin costs or custody costs) which are charged regardless of how much you trade, and transaction costs for buying or selling investment company shares.

Ongoing costs vary widely. Six platforms have no ongoing costs when you hold investment companies; seven have fixed fees that vary from £20 to £120; and the remainder have charges based on a percentage of your assets that may or may not be capped.

Standard transaction costs vary from £5 to £12.50, though 12 of the 26 platforms offer much lower fees (typically between £1 and £2) if you invest regularly.

Commenting on the research, Annabel Brodie-Smith, Communications Director at the Association of Investment Companies (AIC) said: “Platform charges can be complicated, and working out which platform offers the best deal can be bewildering for investors. We have launched this research with the lang cat to help investors compare costs and make an informed decision. However, when choosing a platform, there are many other factors to consider besides costs, such as the level of service, which investments can be held, and whether the platform offers the features and functions that you need.”

Steve Nelson, Head of Research at the lang cat, which conducted the research, said: “We were heartened that our work with the AIC highlighted a wide range of platforms which cater for investment companies. For the particularly cost conscious, there are significant savings to be made if you shop around.  For example, many providers cap their ongoing platform charge (and some don’t charge for custody at all) if you invest outside of mainstream open-ended funds. But of course, price is only one aspect of platform selection. How much help you need choosing investments, how much importance you attach to online functionality and how much you value a big brand name are some of the other things you may want to think about.”

What’s in the research

The research includes a table detailing the costs of holding investment companies on each of the 26 platforms.

To make comparisons easier, the lang cat has also produced ‘heatmaps’ to show the annual costs (as a % of your invested assets) of investing on each platform, based on portfolio sizes ranging from £5,000 to £1 million, and assuming four buy or sell trades are made per year. The colour of each cell indicates relative cost, where green is cheaper and red is more expensive.

Annual cost of investing in portfolios of investment companies on different platforms*

Source: AIC/the lang cat.

The research will be regularly updated and is available here.

-Ends-

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Notes

  1. * The heatmap looks at the cost of investing on each platform for one year. Calculations include ongoing platform fees, any additional wrapper charges and trading where applicable. It is assumed that the investment is within an ISA, with 100% held in investment companies and four transactions (buys or sells) made in the year. Data is based on publicly available charging structure information with some details verified via conversations with platforms in August 2017. Aviva Consumer Platform and Santander do not offer investment companies. Source: AIC/the lang cat.
  2. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment.  Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs.  The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 352 members and the industry has total assets of approximately £174 billion.
  3. The lang cat is a platform, pensions and investment specialist, supplying consultancy, PR and strategic communications across the financial services industry. Blending deep market insight with technical know-how, it makes the complex simple. Find out more at www.langcatfinancial.co.uk.
  4. Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance. The value of investment company shares, and the income from them, can fall as well as rise. You may not get back the full amount invested and, in some cases, nothing at all.

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Media enquiries

Annabel Brodie-Smith
Communications Director
Tel: 020 7282 5580
annabel.brodie-smith@theaic.co.uk
@annabelbrodies
@aicpress

Laura Thomas
PR & Marketing Executive
Tel: 020 7282 5551
laura.thomas@theaic.co.uk
@aicpress

Elmley de la Cour
PR & Marketing Executive
Tel: 020 7282 5583
elmley.delacour@theaic.co.uk
@aicpress